Global petroleum consumption to grow by 1.3 mbpd
EIA said in its report yesterday, that growth in 2016 global consumption was revised upward by 0.1 million b/d compared with last month to an average of 1.5 million bpd.
It noted that projected real Gross Domestic Product (GDP) weighted for oil consumption, which increased by 2.8 per in 2014, is projected to grow by 2.5 per cent in 2015 and by 3.1 per cent in 2016.
Consumption of petroleum and other liquids in countries outside of the Organization for Economic Cooperation and Development (OECD) is projected to grow by 0.8 million bpd in 2015 and by 1.2 million bpd in 2016.
Iran is expected to experience an uptick in economic activity and petroleum consumption, assuming implementation of the Joint Comprehensive Plan of Action (JCPOA) between Iran and the P5+1, which was announced on July 14.
EIA expects non-OPEC production to grow by 1.4 million bpd in 2015, but remain roughly flat in 2016. “A number of producers will see output decrease amid lower prices, which have reduced investment. Furthermore, the ongoing corruption probe at state-owned Petrobras is expected to hurt Brazil’s ability to expand production, limiting growth in 2016 to less than 0.1 million bpd, down from forecast growth of 0.2 million bpd in 2015”, it added.
EIA forecasts OPEC crude oil production to increase by 0.8 million bpd in 2015 and remain relatively flat in 2016. “Iraq is expected to be the largest contributor to OPEC production growth in 2015. In 2016, additional OPEC crude oil supply is expected to come from Iran, which is forecast to boost production if international sanctions targeting its oil sector are suspended”, it said.
EIA projects the Brent crude oil price will average $54 per barrel in 2015 and $59 per barrel in 2016, $6 per barrel and $8 per barrel lower than in July’s short term energy report, respectively.
“WTI prices in both 2015 and 2016 are expected to average $5/b less than the Brent crude oil price. EIA’s updated projection remains subject to significant uncertainties as the oil market moves toward balance. During this period of price discovery, oil prices could experience periods of heightened volatility. The oil market faces a host of uncertainties heading into 2016 including the pace and volume at which Iranian oil reenters the market, the strength of oil consumption growth, and the responsiveness of non-OPEC production to low oil prices. In the more immediate future, there is potential downward price pressure heading into the fourth quarter if refinery runs drop by more than expected during the fall maintenance season”, it added.